Tuesday, B.Riley adjusted the price target for Akoustis Technologies (NASDAQ: NASDAQ:AKTS) to $0.75, down from the previous target of $1.00, while maintaining a Neutral rating on the stock. The revision followed the company's third-quarter fiscal year 2024 earnings report released on Monday, which fell short of consensus expectations.
Additionally, the forecast for the fourth quarter was significantly lower than anticipated, due to a delay in a carrier infrastructure program and weaker sales in other segments.
Akoustis Technologies' stock has experienced considerable pressure, with a 32% decline year-to-date before the earnings report, compared to a 15% increase in the SOX index. Following the earnings release, shares dropped an additional 18% in early trading.
Despite these challenges, the company anticipates a moderate sales rebound in the first quarter of fiscal year 2025 as the carrier project resumes, coupled with potential gains from Wi-Fi 7 filters and other areas.
The company also aims to maintain lower operating expenses as legal costs diminish, which should help reduce cash burn. Akoustis Technologies has expressed hopes to reach a break-even point by the end of 2024.
However, due to the lowered base for the fourth quarter's earnings, B.Riley has reduced its sales estimates for fiscal years 2024 and 2025 by 13% and 41%, respectively. The firm anticipates that Akoustis will need external funding around late 2024 to support further growth.
In summary, while Akoustis Technologies' advanced RF filter technology continues to demonstrate value in demanding programs like those from DARPA and in other high-performance applications, B.Riley remains on the sidelines.
The firm awaits further indications from both the industry and the company that could provide stronger confidence in profitability growth re-acceleration and cash sufficiency before changing its stance on the stock. The revised price target of $0.75 reflects the significantly lower sales forecast for fiscal year 2025 while maintaining a Neutral rating.
InvestingPro Insights
Recent data from InvestingPro highlights a challenging environment for Akoustis Technologies (NASDAQ: AKTS) as they navigate a period marked by financial strain and market pressure. The company's market capitalization stands at a modest $41.29 million, and the stock is trading near its 52-week low, with a price of $0.42 at the previous close. The price-to-earnings (P/E) ratio is deeply negative at -0.569, reflecting investor concerns about the company's profitability.
Akoustis Technologies has also seen a significant revenue growth of 24.47% over the last twelve months as of Q3 2024, yet this has not translated into positive gross profits, with a margin of -5.89%. These financial metrics mirror the company's operational challenges, including a substantial operating income margin deficit of -258.24%. Notably, the stock has experienced a sharp decline of 84.38% over the past year, indicating a tough period for investors.
InvestingPro Tips suggest that Akoustis may face difficulties with its cash flow, as analysts do not expect the company to be profitable within this fiscal year. Additionally, the stock's Relative Strength Index (RSI) points to it being in oversold territory, which could signal a potential rebound or further reflect investor caution. For those interested in a deeper dive into the company's prospects, InvestingPro offers additional analysis and tips — there are currently 15 more InvestingPro Tips available for Akoustis Technologies at https://www.investing.com/pro/AKTS. To access these insights, use the coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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